How to choose your next company car

Wondering how to choose your next company car? Balancing luxury, affordability and tax efficiency can be a tricky business, especially if your employer has imposed strict rules on what you can or can’t have. But don’t worry, here’s our straightforward guide that explains what to look for when choosing your next company car.

Look for low emissions to keep the cost down

To encourage fleets and business users to opt for greener company cars, the government levies a Benefit in Kind (BIK) tax based on CO2 emissions. The higher the CO2 emissions, the more tax you – and your employer – will have to fork out. Currently, there are 35 BIK bands ranging from 13% (0g/km of CO2) to 37% (more than 180g/km). Cars under the 130g/km threshold tend to be the best value.

Don’t ditch diesel without doing your homework

The UK government is no longer championing diesel engines. In fact, HMRC has bumped up the diesel surcharge to Benefit in Kind tax from 3% to 4%, which increases the cost of opting for a diesel over a petrol equivalent. However, if you rack up enough miles, the fuel savings could outweigh the cost of the extra tax. You’ll need to crunch the numbers to see which will work out better for you.

Electric company cars will be a lot cheaper in 2020

Currently, electric cars sit in a 13% BiK tax bracket. In 2019, that will rise to 16%. But in 2020, the government is dropping that to just 2% for zero emissions vehicles. This is designed to incentivise vehicles that drive on battery power alone, so if you’re thinking of getting a Nissan Leaf or similar, it could be worth waiting until 2020 before going electric.

Look for a car that will suit your career and your lifestyle

If you sell wind turbines for a living, you might want to opt for something eco-friendly. That said, you don’t want to have to waste hours queueing for a rapid charger at South Mimms services. Think carefully about the practicality of an electric vehicle or plug-in hybrid, especially if you don’t have off-street parking. Charging it could be more hassle than it’s worth.

Look for exclusive models for company car drivers

Reducing the P11D value doesn’t necessarily mean opting for bargain basement spec. Most brands create models specifically tailored to company car drivers. The Vauxhall Astra ‘Tech line’ range, for example, is built for business users, and includes a sat-nav with an 8.0-inch screen, leather steering wheel and a front armrest as standard.

How to calculate company car tax

To calculate your tax liability, multiply the car's P11D value (list price including extras, plus VAT and delivery) by its BIK tax band. Then multiply that figure by your personal income tax bracket (commonly 20% or 40%). Don’t fancy doing the maths? There are plenty of online calculators that will crunch the numbers for you.
For even more information on company cars, choeck out our article entitled Company cars: everything you need to know.